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Eli Lilly on the point of embroiling a high profile legal scandal in Panama

PANAMA CITY.- Behind this story there is one of the reasons why 87% of drugs in the country are more expensive than in the rest of Latin America. In a claim filed few hours ago to the Public Ministry, Eli Lilly Central America is accused of changing the expiry date of the patent of a high health hazard drug. The action enabled it for three years, until the tort was discovered, to have a significant monopoly, selling the product for more than $ 4 a unit, when its price should be 23 cents.

The lawyer and former ambassador to the OAS Guillermo Cochez, is who filed the controversial claim to the Public Ministry against the pharmaceutical company Eli Lilly Central America, representative in the area of the transnational company. Cochez, who has long questioned the absence of government controls to avoid “the kind of dictatorship of pharmaceutical companies on prices for marketing their products,” led a particular research which aims to demonstrate that Lilly possibly committed a crime against economic wealth of the Panamanian State on the basis of “Swindle and other Frauds”, as well as crimes against collective security and against public faith established in the Criminal Code of the country.

“Sharp business”

This term is used in Panama to describe situations where a person – or a company like Eli Lilly and Company Limited – has engaged in disrespectful behavior and opportunism against a person or groups.

Guillermo Cochez says that in this story the sharpness of the American pharmaceutical company began when the company told the Ministry of Health it was the owner of the patent of the high health hazard drug branded Zyprexa, whose generic name is Olanzapine tablets and dispersible tablets, in 5 mg and 10 mg. This way, Lilly registered the product with the General Directorate of Industrial Property Registry of the Ministry of Trade and Industry under Certificate of Registration No. 079775, supposedly in force until February 29, 2016 and marketed under the name of Zyprexa.

But the reality was different. In the United States, the product – which is currently distributed in Panama by the companies C.G. de Haseth and CIA, S.A. and Droguería Ramón González Revilla, SA – had its patent granted between February 29, 2006 until February 29, 2011. Cochez explains that “When they sold under the rights to this patent, although it was expired, they set the prices they wanted and there was no competition, so this why it is a crime against competitors’ property; this is why it is the crime against health because you are selling products much more expensive than those permitted. This is why it is the crime against property, not only against affected firms because they could not enter the competition, but against the state because it forced the main buyers in Panama, which are the Ministry of Health and the Social Security Fund, to purchase products at $ 4 a unit when it should have been at 23 cents. In which other countries they did that? ” wonders the lawyer, adding that due to such practices, there are several multimillion-dollar lawsuits filed against the company in the United States and the European Union.

When we asked why the Panamanian authorities were not aware of this issue before, Cochez replied that the root probably was in the antiquated registration systems that existed at that time in the corresponding entities.

Billions in profits

The former ambassador to the OAS explains that “the lack of competition in the public sector and the private sector, with regard to the drug Olanzapine, caused an expenditure on many million dollar costs to the state and private pharmacy consumers with this malicious and possibly willful performance of the laboratory.” He says his research draws on the price at which the coated tablet of Olanzapine 10 mg. was sold by the only two distribution companies in the country, protected by the patent altered. According to that, the cost to the public was US $ 4.45 per tablet, until the inevitable competition came and the price fell to US $ 0.238 per tablet, a difference of B / 4.212 per tablet.

The lawyer says this is “an absolute monopolistic practice, which addresses the criminal sphere and should be investigated by the judicial authorities”. He also says that, although his team has not intended to foretell possible findings of forensic audit or accounting expert evidence, they made “an estimation of the possible injury suffered by suppliers and the Panamanian state.”

According to these estimates, in the case of Social Security, considering four tenders that were made between 2011 and 2015, probably the financial loss to the State could raise to just over $ 22 million. Meanwhile, in the case of the Ministry of Health, considering three tenders in 2011, the amount exceeds $ 261,000.

À la mafia

Somewhere in all this plot, a Company, Inversiones Tagore Panamá, involved in the import, distribution and marketing of high quality generic drugs, aware that the Olanzapine product registered by Eli Lilly already had its patent expired in the United States, decided to participate in one of the tenders called for by the Ministry of Health.

Faced with the threat to its monopoly – explains Cochez – Eli Lilly and Company Limited, through its lawyers Law Service, P.C. intimidated and severely threatened in writing to Tagore Panama, indicating “that it must refrain from participating in public and private tenders in the Republic of Panama, offering any generic under the patent of the compound Olanzapine, with the possible intention of gaining the undue profit of winning the public tender in question.” The lawyer claims that this “is a clear threat to the free exercise of trade, especially since the claim filed was based on false facts”.

Not satisfied with this, according to the former ambassador to the OAS, the legal representatives of Lilly also issued note on April 9, 2013, to the then Minister of Health, Javier Díaz, in which he was indicated that his office must refrain from: “obtaining the Olanzapine compound through unauthorized third parties, since the offer for sale, the introduction and marketing of such unauthorized proprietary products constitute patent misuse”.

To be continued…

Finally, as the sky cannot be covered with one hand, the General Directorate of the Registry of Industrial Property for the Ministry of Commerce and Industry received accurate information and issued Resolution No. 6013 dated April 12, 2013, where it was embodied that they were already aware of the incorrect information provided by the laboratory and that this had led the administrative entity to make the mistake of granting undue protection to Lilly. It was from that moment that the monopoly ended and the price of the drug fell to 23 cents a unit.

The lawyer welcomes the acknowledgment of the government entity, but insists that the performance of Eli Lilly, at first instance, caused economic damage both the state and the company Inversiones Tagore Panamá, which is now represented by Guillermo Cochez. Therefore, after introducing his complaint, he expects that in the coming weeks, representatives of the pharmaceutical company are cited by the Public Ministry and an official investigation is opened to start a file with this unusual case, in which said pharmaceutical may also have incurred in other countries.